As the holiday approaches, motorists will be able to celebrate the decline in both new and used car prices.
The start of the typically strong summer buying season has brought with it some great news for U.S. car buyers. According to a variety of sources, prices are tumbling on both new and used vehicles – especially those Japanese offerings that were in short supply last year in the week of that country’s devastating earthquake and tsunami.
While prices vary by model and manufacturer, you can expect to pay about $500 less for the typical new car, truck or crossover than you would have for the same product a year ago, according to research by Kelly Blue Book.
Meanwhile, after a record run-up in pricing during the winter and spring, used car prices also appear to be on the decline.
Some of the biggest discounts, the tracking firm reports, come on Japanese models like the Honda Civic and even the Toyota Prius. But that may be a bit misleading. Following the March 2012 natural disaster, most Japanese products were in short supply, leading makers to trim back rebates and other discounts – effectively raising prices. Those givebacks are now getting back to more normal levels, Bob Carter, head of the Toyota division, tells TheDetroitBureau.com.
Whatever the reason, KBB reports that the typical Honda is currently going for about $1,200 less than a year ago, while Toyota, Subaru and Mazda products are down by as much as $800.
Japanese inventories are largely back to normal after the production cuts that followed the 2012 crisis, meaning motorists will also find better choices at their local dealers.
One of the biggest price cuts comes at Honda, where a new Civic is now going for an average $1,550 less than a year ago, according to KBB. Last year’s launch of an all-new 2012 model was largely aborted by the Japanese production cuts, leading to a sharp, if temporary, increase in the price of the Civic.
But the price of the Toyota Prius is also down by a full $2,500 from June 2011, reports Kelly Blue Book. And fuel prices also appear to be a factor. Demand for the Prius surged as gas prices soared, but sales of all high-mileage models have begun to slip as fuel costs have settled back again.
Detroit makers are also cutting prices, largely through increased incentives. But the discounts are smaller, reports KBB, typically in the $500 range.
Ironically, while Japanese inventories are getting back to normal Detroit makers are struggling to meet demand. Ford Motor Co. warns it will lose market share because it can’t roll out new vehicles like the Explorer SUV and Focus sedan and hatchback quickly enough. That’s normally a recipe for reduced discounting.
Hyundai is a case in point. The maker also is running into production bottlenecks that will likely lead to a dip in its market share for 2012, TheDetroitBureau.com reports. (Click Here for that story.) Hyundai now is offering the lowest incentives of any major automaker in the U.S. market.
Overall, now may be a great reason to consider buying a new vehicle suggests Alec Gutierrez, a senior market analyst for KBB. “Although conditions in the global economy continue to deteriorate, consumers who are willing to pull the trigger on a new vehicle will find that there are plenty of deals available.”
New car buyers aren’t the only ones who are getting good news this summer. Research firm CNW Marketing reports that used car prices also appear to be on a downward slope after months of steady increases. As with the new car market, pricing for “previously owned” vehicles is sensitive to supply and demand and prices were negatively influenced by the fact that there were fewer nearly new models coming back to market. That, in turn, reflected the slower sales of new cars during the depths of the recession in 2008 and 2009.
As new car sales recover there’ll subsequently be more product entering the used market eventually leading to further discounts there.